Framlington intends to raise up to £30m for a venture capital trust which invests in the alternative investment market.
The Framlington Aim VCT will aim for growth by investing in Aim companies that qualify for inclusion in a VCT. The manager can also invest in companies traded on Ofex and unquoted companies, but at the moment the amounts are not expected to be significant. Money awaiting investment in qualifying Aim companies will be invested in cash, gilts and Aim investments that are not necessarily qualifying.
The VCT will be managed by Brian Watson, who has over 26 years' investment experience, with a particular focus on smaller companies. He has managed the Framlington innovative growth trust for the past 14 years. The trust holds stocks listed on the FTSE Small Cap and FTSE Fledgling indices as well as Aim.
Watson will be supported by Framlington's UK team, which includes Roger Whiteoak, manager of the Framlington UK smaller companies unit trust and Throgmorton trust, both of which invest in Aim companies.
Framlington will apply the same investment process to the VCT as it has for the existing funds. The UK team will look for growth at a reasonable price, the quality of management, the company's financial position, the industry it operates in and its competitive position.
Due to its experience in managing smaller company portfolios, Framlington has built relationships with a network of brokers and analysts from investment banks and smaller regional broking houses. These contacts will provide a source of ideas, further contacts and meetings.
Although an experienced manager in smaller companies Framlington has no track record in VCTs. However, the investment process will remain the same as its existing funds so a new investment vehicle should not be a problem.
According to Standard & Poor's, the Framlington innovative growth trust is ranked eighth out of 27 trusts based on £1,000 invested on a mid to mid basis with net income reinvested over three years to October 4, 2004.